BMC a failed business - PCSSE

SHARE | Monday, 19 October 2015 | By Keitebe Kgosikebatho

Tombale

Beef export monopoly-Botswana Meat Commission (BMC)'s Chief Executive Officer Dr Akolang Tombale, is confident that the heavily indebted parastatal, which is swimming in debts of over P900 million, will soon turn the corner. He assured the Parliamentary Committee on Statutory bodies and State Enterprises (PCSSE) last week that there is still hope for the meat commission despite its historic staggering debts, despite insistence from some members of the committee that BMC is practically a failed business. The committee members insist that it does not make business sense for BMC to be still in operation while milking millions from government coffers year in, year out. “It should not take a CEO more than three months to say look, I can’t move, what is it that is still the problem,” Committee chairman Moyo Guma put it to Tombale, adding that failure by the CEO and his team to deliver a turnaround result for BMC may be an indication that the meat commission is technically dead. “You act like a businessman who is in business because somebody else want you to be,” said another committee member Pius Mokgware-the Gabane/Mmakgodi MP.Tombale disagrees. In response he differed with Guma, indicating that he still has to align the new strategy to what he found at BMC. “The BMC is doing more that good currently, in fact there is more than hope for us now,” Tombale said in response to The Patriot on Sunday after appearing before the parliamentary committee. BMC has currently accumulated debts amounting to about P900 million, P600 million of which is owed government and the remaining amount to other institutions.Tombale told the committee that in a bid to restructure its financials BMC has roped in the services of a transaction advisor, who started work last year and is expected to complete by end of October 2015. According to Tombale, the transaction advisor will not only restructure the BMC balance sheet but will look at the finances in general and the change in the legal status of the BMC. With a working capital of about P300 million a year, Tombale said the commission’s target is to at least pay 65-70 percent of revenue generated to farmers. He refuted reports that their prices were not as competitive compared to other meat dealers in the region like Namibia. His explanation was that, the BMC has over time been subsidising production costs for farmers by paying for supply logistics and buying live cattle and transferring risks to itself.

The fact that most farmers locally are not keeping records, according to Tombale, is affecting the value of their cattle. He said 80 percent of cattle in Botswana are in communal areas, and do not comply with international standards and BMC marketing strategy. “It is then upon the BMC to transform them to comply through our feedlot program,” he said. According to Tombale other changes introduced by the BMC in a bid to restructure and boost its financials is outsourcing the marketing of its beef to Global Marketing Company, a South African company which also handles marketing for Namibia. “We decided to outsource it after realising that our in-house marketing was not bringing results,” he said.Supply challenges for BMCMeanwhile as the inevitable effects of the looming drought start showing, the national beef producer has called on farmers to sell cattle to them. It has become apparent that farmers are reluctant to sell cattle to BMC due to their current condition and prefer to wait for the rainy season to revive pastures. So bad is the situation that it is now dealing a blow on the on-going BMC field buying programme known as the direct-cattle buying plan (DCP). “Although our target per area is usually as much as our feedlot quota can accommodate, in Mahalapye communal area we only managed to buy 21 cattle from farmers,” Livestock Procurement Executive Manager Kenneth Makubate told The Patriot on Sunday in a separate interview.Makubate advised farmers to rather sell now, as chances are the more time they wait, the more severe climate conditions will get, which will eventually mean they will end up with dead cattle than money in the bank. Besides that, Makubate explained that the direct cattle buying plan which is more convenient to farmers as cattle are bought just at their doorstep should be taken advantage of. “We operate on a very busy timetable, if you miss the chance to sell when we are in your area, you will then be forced to transport your cattle to the next area we will be buying from,” he said.Other options available, he said, will then be directly transporting cattle to the BMC Sunnyside farm in Lobatse, which besides requiring the farmer to book in advance will mean the farmer now has to pop from his/her pocket to fund transportation from their respective farms. That farmers may be hesitant to sell because of the cash troubles that the BMC was recently reportedly in, which translated in the commission not paying farmers on time, Makubate assured farmers that BMC was now without financial woes and will pay them in time. “BMC will honour payments to all farmers/suppliers, in a period not exceeding 21 days after supplying/buying,” said Makubate, adding that ideally farmers are supposed to be paid within 14 calendar days. “As it is, our cash flow problems have been sorted, we do not owe anyone money anymore,” he added.BMC is currently facing stiff competition from private butcheries and other commercial meat dealers, who entice farmers by buying cattle from them throughout the year.